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Outer approximation and submodular cuts for maximum capture facility location problems with random utilities

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  • Ljubić, Ivana
  • Moreno, Eduardo

Abstract

We consider a family of competitive facility location problems in which a “newcomer” company enters the market and has to decide where to locate a set of new facilities so as to maximize its market share. The multinomial logit model is used to estimate the captured customer demand. We propose a first branch-and-cut approach for this family of difficult mixed-integer non-linear problems. Our approach combines two types of cutting planes that exploit particular properties of the objective function: the first one are the outer-approximation cuts and the second one are the submodular cuts.

Suggested Citation

  • Ljubić, Ivana & Moreno, Eduardo, 2018. "Outer approximation and submodular cuts for maximum capture facility location problems with random utilities," European Journal of Operational Research, Elsevier, vol. 266(1), pages 46-56.
    • Handle: RePEc:eee:ejores:v:266:y:2018:i:1:p:46-56
    DOI: 10.1016/j.ejor.2017.09.023
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    References listed on IDEAS

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